May 11, 2021

What unites us? The key differences & similarities between PBSA & coliving

During last week’s Co-Liv Summit panel on “Cross-learnings from PBSA to Coliving and Back” we examined the similarities and differences between coliving and PBSA. A topic we are passionate about and have previously covered in our Trend Report and conferences. The expert panel included Eleonora Guardini from Greystar Europe, Samuel Vetrak from BONARD, Marco Lotichius from International Campus Group, Jelmer David Ikink from MyTown Co-living, and our Co-Founder Frank Uffen.

What are the key differences?

  • Target audience: coliving is open to the whole letting market whilst PBSA is only targeted towards students. Nonetheless, coliving houses students and certain PBSA providers have adopted hybrid models so the audience pool is shared to an extent.
  • Length of stay: PBSA usually follows the academic year so the contract period is 12 months. Coliving on the other hand is more flexible and the average length of stay is between 6-8 months. This may be longer if a brand successfully manages to create a tight-knit community or if there is little competition.
  • Maturity: PBSA is an established asset class whilst coliving isn’t yet.
  • Adoption: Coliving is a global concept and has roots in every continent whilst PBSA began in the Anglo-Saxon world and is now being adopted elsewhere.
  • Rooms: the average PBSA property has 274 rooms whilst the average coliving site has 138 rooms. Additionally, the room sizes and types differ as coliving usually offers larger rooms with higher-end finishing and furniture. Tip: join our upcoming Academy on Spatial Design for PBSA & Coliving for more information on this topic.
  • Pricing: coliving rent prices are usually more expensive as they offer more space and quality. Additionally, their target audience usually has more budget as they are already working.
  • Return on Investment (ROI): PBSA properties on average have more rooms and longer contract periods which result in less risk and higher returns. The average total operating costs expense (OPEX) for PBSA is in the zone of 30-35% - depending on the multiple factors, such as size, quality and age of the property - and therefore the average NOI is around 65-70%. Some coliving properties may will have difficulties achieving similar NOIs due to their smaller room numbers, shorter contracts and more tenants to gain and manage. Here lies an opportunity for operational efficiency which can be achieved via technology [Data source: BONARD].
  • Location: for students living in PBSA it is important to be close to the university and downtown. For colivers (has that term been coined yet? We think it should) the micro-location itself is most important.
  • Flexibility: coliving has more flexibility when it comes to length of stay and their target audience. On the other hand, this flexibility also creates a challenge when trying to define, regulate, and invest in the asset class.
  • Licenses: depending on the country the licenses given to PBSA and coliving properties differ. However, there are operators who are adopting a hybrid model by combining the two. This model is easier to implement in emerging markets such as Central Eastern Europe as they will then fall under a hotel license. In developed markets the licensing and taxing is stricter which makes it increasingly challenging to combine the two.

What unites the two?

  • Community: both offer a solution for the increased feelings of loneliness as they are adamant about creating a unique and welcoming community for each property. This requires continuous tweaking of your brand and building but also increases ROI and retention/renewal rates.
  • Housing as a service: each property offers more than just a roof above your head. There are additional services and amenities available to residents. Examples include gyms, co-working spaces, cinemas, and bars.
  • B2B leasing: another key “co” word embraced by both models is collaboration. PBSA operators collaborate with universities and study abroad agents to ensure their properties house the next student cohorts. Coliving operators collaborate with corporations to house their (international) talent in close proximity to their offices. The demand for corporate housing increased for certain regions during the pandemic as essential workers could continue working from the office as long as companies provided nearby housing.
  • Policy & regulation: though there may be differences in licensing and taxation, both shared living models experience policy lags and inconsistencies which stifle their growth. For example: setting mandatory parking spaces per property which both groups don’t necessarily need as they are close enough to their respective university and/or offices.

The future is blended

At The Class Foundation, we’re eager to observe the evolution of coliving as we see great potential and demand for it. We believe the two communities should work closely together to learn from and share best practices with one another. In case you would like to know more about coliving, we suggest you reach out to Co-Liv; their mission is to make coliving a wide-spread, life-enhancing alternative to the current forms of living.

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